Tài liệu Setting up and operation in Vietnam doc

SETTING UP AND OPERATING IN VIETNAM
Russin & Vecchi
International Legal Counsellors
Ho Chi Minh City
OSIC Building, 15/F
8 Nguyen Hue Blvd, D1
Tel: (84-8) 824-3026
E-mail:
Hanoi
Hanoi Central Office Building, 11/F
44B Ly Thuong Kiet St
Tel: (84-4) 825-1700
E-mail:
BANGKOK - MOSCOW - NEW YORK - SANTO DOMINGO - TAIPEI - VLADIVOSTOK - WASHINGTON, DC - YANGON - YUZHNO SAKHALINSK
Russin & Vecchi
TABLE OF CONTENTS
International Legal Counsellors................................................................................................................................i
BASIC LEGAL BACKGROUND...........................................................................................................................1
Criteria 19
ENVIRONMENTAL CONSIDERATIONS..........................................................................................................39
4.6Construction agreements...................................................................................................................................47
5.4.1Minimum wage...............................................................................................................................................50
5.4.2Overtime payment..........................................................................................................................................51
5.4.3Annual leave...................................................................................................................................................51
5.4.4Bonuses..........................................................................................................................................................51
5.4.5Social and medical insurance.........................................................................................................................51
5.4.6Retrenchment..................................................................................................................................................52
5.4.7Retrenchment allowance and unemployment insurance................................................................................52
5.5.1Individual labor agreement.............................................................................................................................53
5.5.2Collective labor agreement.............................................................................................................................54
Chapter Six.............................................................................................................................................................56

PROTECTION OF ................................................................................................................................................56
INTELLECTUAL PROPERTY.............................................................................................................................56
6.4.3.2 Theft...........................................................................................................................................................60
PREFACE
We believe that the information in this booklet will be helpful during a company’s review of
Vietnam as a site for a factory, to provide a service, or otherwise as an investment venue. We
have emphasized material that would normally be on a site selection team’s check list.
While the information is only a summary, we believe that this summary provides a significant
amount of information on which a company can rely to understand Vietnam’s legal context.
We hope that the material is useful. We would be happy to respond to specific questions, and
to bring the information contained in this book to the next level of detail.
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* * *
In this book, we define and abbreviate terms the first time that we use them. We have also
prepared a Glossary for those readers who may not read from the beginning.
This booklet was written and is periodically revised by lawyers from Russin & Vecchi.
This version is current through June 2007.
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GLOSSARY
BTA US-Vietnam Bilateral Trade Agreement
CIT Corporate Income Tax
CLUR Certificate of Land Use Rights
DOLISA Department of Labor, War Invalids and Social Affairs
DOSTE Department of Science, Technology and Environment
DPI Department of Planning and Investment
EIA Environmental Impact Assessment
EL Enterprises Law
EP Economic Police

EPZ Export Processing Zone
FIE Foreign Invested Enterprise
HCM City Ho Chi Minh City
IC Investment Certificate
IL Investment Law
IPR Intellectual Property Right
IZ Industrial Zone
LFI Law on Foreign Investment
LUR Land Use Rights
MMO Market Management Office
MOLISA Ministry of Labor, War Invalids and Social Affairs
MOST Ministry of Science and Technology
MPI Ministry of Planning and Investment
NOIP National Office of Intellectual Property
PIT Personal Income Tax
USTR US Trade Representative
VAT Value Added Tax
VND Vietnamese dong
WTO World Trade Organization
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Chapter One
BASIC LEGAL BACKGROUND
T
his chapter sets out the framework for foreign investment. The framework is a point of
reference and recognizes that special projects will have special needs.
1.1 Comprehensive Enterprises Law (“EL”) and the Investment Law (“IL”)
The legal framework for doing business in Vietnam changed significantly for foreign
investors on July 1
st

, 2006. The prior system whereby there were different legal mechanisms
for domestic and foreign investors has largely disappeared. The Enterprises Law (“EL”) has
created a unified legal framework for investment by providing similar business structures
from which both domestic and foreign investors can choose. They are:
• Sole traders: a private enterprise, which is owned solely by an individual, and the
owner has unlimited liability for the business of the enterprise;
• Partnership: two or more individuals can set up a partnership; partners are jointly and
severally liable for obligations of the partnership;
• Limited liability company: there are two types; a one member limited liability
company and a two to 50 member limited liability company; and
• Joint stock company: this entity has shares and there is a minimum of three
shareholders.
Appendices 1 and 2 of Chapter One provide comparison tables for these forms of business
organization.
Licensing procedures are discussed in section 1.5 below.
The Investment Law (“IL”) provides details on procedures to carry out investment activities,
the rights and obligations of investors, assurances of the legitimate rights and interests of
investors, investment incentives, state management of investment in Vietnam and rules on
offshore investment from Vietnam.
As is normal practice, the EL and the IL need to be supplemented by implementing
regulations. To date, the Government has issued three Decrees that provide guidelines to
implementation of the EL and the IL. They are: Decree 88/2006/NĐ-CP dated August 29,
2006 on Business Registration (“Decree 88”) which is mainly applicable to setting up a
100% domestic business entity; Decree 101/2006/NĐ-CP dated September 21, 2006 which
provides guidelines for the re-registration, conversion and change of investment certificates
of existing foreign invested enterprises (“Decree 101”); and Decree 108/2006/NĐ-CP dated
September 22, 2006 which provides details and guidelines on implementation of several
provisions of the IL (“Decree 108”).
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1.2 Key administrative bodies
The Ministry of Planning and Investment (“MPI”) is the central administrative body that
oversees all investment activities including foreign investment. The MPI is responsible for
drafting legislation, developing policies, providing guidance and consultation, and
coordinating with other authorities. In addition, the MPI will evaluate important investment
projects as decided by the Prime Minister. The MPI is also the contact point for foreign
invested enterprises (“FIE”)--that is, any investment entity with some foreign investment--in
respect of problems or issues that arise. The MPI is headquartered in Hanoi, and has
representative offices in Ho Chi Minh City (“HCM City”) and elsewhere throughout the
country.
Provincial People’s Committees directly administer their own foreign investment activities
and issue investment certificates (“ICs”) for almost all types of foreign invested projects.
Every investment project that involves foreign capital needs to have an IC. Some projects
that are conditional projects or projects that are very large need to be approved by the Prime
Minister before the IC can be issued.
The Department of Planning and Investment (“DPI”) under local People’s Committees is the
contact point in the licensing process. The DPI plays an active role in evaluating an
investment request for projects that must pass through an evaluation process.
If an FIE is located within an industrial zone (“IZ”)
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, it is under the administration of that
IZ’s Management Board. That is, an FIE in an IZ will operates subject to the IZ’s rules on
import/export, environment, labor, etc., in addition to the general rules of the Government
and the MPI. A Management Board is authorized to issue an IC for a project that will be
located within an IZ and that is within its administration.
Other, more specialized ministries are also involved in foreign investment. For example, for
high-tech projects, the Ministry of Science and Technology (“MOST”) plays an
administrative role in developing the industry’s specific policies for foreign investment, and
in overseeing the application of foreign investment regulations in harmonization with the
industry’s own rules. It is often consulted by the MPI prior to actual licensing.

1.3 Foreign investment guarantees and incentives
Through the IL, the Government commits to create a safe and friendly environment for
foreign investment. The Government expressly states that it treats domestic and foreign
investors in all economic sectors equally before the law. The Government guarantees that it
will neither expropriate nor nationalize investment capital, real property and assets of
investors inclusive of foreign investors.
In addition, in the event that law or policy subsequently promulgated provide larger benefits
and incentives than those previously given to investors, such larger benefits and incentives
will automatically apply retroactively to those investors. If changes adversely affect existing
investors, the Government commits to adopt offsetting, particular measures, such as tax
holidays or payment of compensation, in order to approximate the same conditions that
i
In fact, there are different types of zones, namely industrial zones, export processing zones and high-tech
zones. We use the general term “industrial zone” to include all types.
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existed before the amendments. This undertaking appeared also in the prior law, and there is
a record of Government adherence to this undertaking.
While developing a more comprehensive IL framework, the Government has continued to
improve other laws that affect the business environment, such as the Commercial Code 2005,
Law on Electronic Transactions 2005, Civil Procedures Code 2005, etc.
Business entities are offered certain incentives to invest in Vietnam, mostly in the form of
tax exemptions or reductions. These incentives, along with rules on the operation of
business activities, are presented in the matrix which appears at the end of this Chapter.
Compared to the former law, incentives are given more selectively, reflecting a more
selective investment environment.
1.4 Government’s special policies for high-tech industries
Vietnam especially encourages foreign investment in high-tech projects. The MOST
identifies what kinds of projects are considered to be high-tech projects.
As they are especially encouraged by the Government, high-tech projects enjoy the best

preferential treatment and incentives. For example, the tax rate is the lowest, the tax
exemption period is the longest, etc. While we discuss taxes at Chapter Two, briefly, the
corporate income tax rate for a high-tech project can be as low as 10% or 15%, depending on
the specific nature and the location of the project. Interestingly, for a high-tech project in
software development, individuals who are involved in software development will benefit
from preferential personal income tax rates. Further, a company with a project to do
research, to develop technology or to train professionals in science and technology can be
exempt from the payment of land rental for a certain period of time.
1.5 Licensing procedures
Generally speaking, foreign investors are able to choose whatever form of business structure
is available for Vietnamese investors to carry out their business. The main difference is that
when a foreign investor invests in Vietnam, it has to specify particular activities which the
new company will conduct, and it must apply for an IC. Depending on its specific nature, a
new IC can be obtained either through a registration process or through an evaluation
process. As the words imply, registration is slightly more simple. Evaluation means that, in
addition, the structure of the project will be reviewed.
• For an investment project in which investment capital is below 300
billion Vietnamese dong (equivalent to about US$19 million) or which is not a
conditional project
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, registration only is required.
• For an investment project in which investment capital is from 300 billion
Vietnamese dong or which is a conditional project, evaluation procedures apply.
Different projects are licensed by different licensing authorities, depending, again, on the
ιι
A conditional project is a project that must satisfy several conditions before being approved. The
Investment Law provides only a general list of conditional projects; for example: projects having an impact
on social order and safety, public health, financial/banking projects, real estate projects, entertainment
services, etc. Further elaboration is required.
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specifications of the project. As discussed at section 1.2, although only provincial People’s
Committees and Management Boards of IZs have the authority to issue ICs to foreign
invested projects, some conditional projects and some large size or important projects need
approval in principle by the Prime Minister upon recommendation from the MPI and other
ministries. Projects that need to be approved by the Prime Minister are listed in Appendix 5
of this Chapter.

An IC is project-specific in another sense. While there are standard documents to be
submitted, additional documentation, such as an Environmental Impact Assessment (“EIA”),
land documents and permits are required for certain projects.
An IC is issued for a foreign investor that invests for the first time in Vietnam. This IC will
be treated as a Business Registration Certificate, a document necessary to set up an entity in
Vietnam. This treatment is different as between domestic investors and foreign investors.
Domestic investors are allowed to obtain a Business Registration Certificate before they
need to obtain an IC. In addition, not all projects invested by domestic investors require an
IC.
FIEs can at the same time perform more than one investment project. If an FIE has a new
investment project, it will file another application for the issuance of an IC for that project
and need not establish a new business vehicle. In other words, this means that an FIE may,
at the same time, carry out more than one investment project.
The statutory time limit for a licensing authority to consider and issue an IC is 45 working
days. The administrative system has been reformed, efficiency in the licensing process has
been improved, and this time limit is usually observed. Some licensing authorities have
significantly reduced the time in which they act.
The actual time limit will probably vary for each company, depending on the extent of
special conditions requested by or being offered to the company. We would expect the time
variables to occur before the application is submitted, not after. That is, the justification for
special treatment should be carefully documented ahead of time, and informal discussions
with the licensing authority beforehand are important.

An IC will specify the privileges to which a “preferential” or “especially preferential”
project is entitled in respect of tax holidays, etc.
It is important to know, in advance, what are the essential approvals and licenses required for
a project. An IC is the first step. Other approvals may be required. For example, the
construction of a factory requires approvals by certain authorities, such as the land
administration body and construction department in that locale.
1.6 Forms of investment
As mentioned, foreign investors and domestic investors are treated equally in the choice of
direct investment forms. However, there are some limitations and restrictions on the forms of
investment as they apply to foreign investors, depending on investment fields and industries.
The Government is drafting a list of fields and industries in which there will be a cap on the
percentage of capital contribution by foreign investors. We will update this booklet when the
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regulations regarding this matter are promulgated.
Generally speaking, investors, including foreign investors can choose the following forms to
invest in Vietnam:
• a business entity in which foreign investors own 100% capital;
• a joint venture company between domestic and foreign investors;
• investment under contracts such as a Business Cooperation Contract (“BCC”), or
Build-Operate-Transfer (“BOT”), Build-Transfer-Operate (“BTO”), or Build-
Transfer (“BT”) contracts;
• reinvestment in the existing business;
• purchase of shares or contribution of capital and participation in management of
investment activities;
• investment in the merger or acquisition of enterprises;
• other forms of direct investment.
a) The first two above forms of direct investment will result in establishing a business
entity.
• A single investor can choose either to set up a private enterprise or a one member

limited liability enterprise to operate its business;
• Two or more investors may choose to set up one of the following forms of business
structure to carry out their business activities: two to 50 member limited liability
company, partnership or joint stock company.

See Appendices 1 and 2 at the end of this Chapter that compare the forms of business
structures mentioned above.
b) Investment through contracts.
• Investors may enter into BCCs to cooperate in production with an agreed form of
profit-sharing or production-sharing and other forms of business cooperation.
• Investors may sign BOT, BTO and BT contracts with state agencies to execute
projects on construction, expansion, modernization and operation of infrastructure
facilities in the domains of transport, electricity production and business, water
supply and drainage, waste treatment and other domains as stipulated by the Prime
Minister.
c) Investors may invest in business development in the following forms:
• Expanding scale, increasing capacity or business capability of their existing
investment;
• Renewing technologies, raising product quality, reducing environmental pollution.
d) Investors may also invest in Vietnam by contributing capital to or purchasing shares
from other existing business entities. The ratio of capital contributed or of shares
purchased by foreign investors in some fields and industries will be specified by the
Government.
e) In addition, investors have the right to merge or to acquire existing companies and
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branches. The merger and acquisition of companies and branches must comply with the
EL, the Competition Law and other laws. Each case may have its own set of conditions.
1.7 Fields, industries that entitle investor to investment preferences
An investor in several business fields and industries is entitled to investment preferences.

These are preferential projects. It is important for a company, at the licensing stage, to
satisfy the licensing authority that its project qualifies.
The IL provides a list of fields and industries that are entitled to investment preferences and
those preferences apply equally to domestic and foreign investors:
• Production of new materials or new energy; manufacture of hi-tech products, bio-
technology or information technology; mechanical engineering;
• Farming and processing of agriculture, forest or aquatic products, salt making;
production of hybrids, new plant varieties and/or animal breeds;
• Use of high technologies or modern techniques; protection of the ecological
environment; research, development and nourishment of high technologies;
• Employment of a large number of workers;
• Building and developing infrastructures, important and large-scale projects;
• Development of education, training, health care, physical training and sports and
national culture;
• Development of traditional crafts and industries;
• Other production and service domains which need to be promoted.
The Government is in the process of finalizing a decree to which a detailed list of areas that
are entitled to investment preferences and special investment preferences will be attached.
We will update this booklet when the list is adopted.
The application dossier for preferential projects must include a feasibility study. It is
important, to prepare a solid feasibility study.
1.8 Conditional investment domains
Conditional investments must satisfy several conditions. The IL provides a general list of
conditional domains that apply to every investment project involving either foreign or
domestic investment, and the list includes:
• Domains that affect national defense, security, social order and safety;
• Financial and banking domains;
• Domains that affect public health;
• Cultural, information, press and publishing;
• Entertainment services;

• Real estate business;
• Survey, prospecting, exploration and exploitation of natural resources; ecological and
environmental projects;
• Development of education and training;
• Some other domains as provided by law.
For foreign investors, and apart from the foregoing, conditional investment domains include
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those listed in Appendix 6 of Chapter One.
One should note that an enterprise in which domestic investors own 51% or more of the
charter capital will be treated as a domestic investment.

1.9 Operation of business entity
The procedures to set up an entity to carry out business are somewhat different as between
foreign investors and domestic investors. After being set up, a business (regardless of
whether invested by foreign or domestic investors) will operate within the same legal
framework especially in relation to the form of business structure. The differences amongst
forms of business structure are listed in Appendices 1 and 2 at the end of this Chapter.
Generally, the law requires that the legal representative of any business entity must reside in
Vietnam. In his/her absence for more than 30 days, s/he must authorize another person to act
as the legal representative of the entity.
The operation duration of a business entity can be indefinite unless the charter of the entity
provides otherwise or the business entity is dissolved according to law. However, note that
the duration of a foreign investment project may not exceed 50 years but may be reviewed.
In case of special circumstances, the Government may grant a longer term, which, however,
may not exceed 70 years. Presumably, upon expiration of the term of an investment project,
foreign investors can continue to use their business entity to carry out other new projects.
A business entity is dissolved in the following cases:
• The operating duration stated in the company’s charter expires without any decision
to renew;

• A decision is made by the owners of the entity;
• A company no longer has the minimum number of members required by law for six
consecutive months (ie, two members for a two to 50 member limited liability
company or three members for a joint stock company);
• The business registration certificate is withdrawn.
An entity may be dissolved only after paying all of its debts and other liabilities. If an entity
is unable to pay its debts when due, it may be subject to bankruptcy.
1.10 The US-Vietnam Bilateral Trade Agreement and high-tech industries and WTO
Vietnam’s market is open to investment. The US-Vietnam Bilateral Trade Agreement
(“BTA”) adopted in December 2001 dramatically liberalized access to Vietnam’s market for
US--and other--goods, services and investments. The BTA improved the framework for
protecting intellectual property rights. We discuss the impact of the BTA on intellectual
property in Chapter Six.
Furthermore, as a result of the BTA which in many ways anticipated Vietnam’s accession to
WTO, there has developed a general cooperative working environment among foreign
investors, existing foreign invested business and Vietnamese authorities. There has been a
greater level of willingness on all sides to discuss and implement new changes. This general
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positive atmosphere has benefited all investors.
The requirements of the BTA provided an introduction and road map to the terms that have
been incorporated into Vietnam’s WTO accession agreement. While some special
conditions for US investors remain, since Vietnam’s accession to WTO in January 2007,
virtually all special conditions that existed under the BTA are now available to all WTO
members.
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APPENDICES
For Chapter One
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APPENDIX 1
COMPARISON OF A ONE MEMBER LIMITED LIABILITY COMPANY, A TWO TO 50 MEMBER LIMITED LIABILITY
COMPANY AND A JOINT STOCK COMPANY UNDER THE LAW ON ENTERPRISES
One member limited liability
company (One member LLC)
Two to 50 member limited liability
company
Joint stock company
Definition A one member LLC may be
established and owned by an
individual or an entity--foreign or
domestic. It is, simply, a company
owned by one entity or person.
A two to 50 member limited liability
company is an enterprise in which:
• Members are organizations and/or
individuals; the total number of
members may not exceed 50;
• Members are responsible for debts
and other property liabilities of the
enterprise within the amount of
capital that they have committed to
contribute to the company.
The company is not entitled to issue
shares.
A joint stock company is an enterprise in
which:
• Charter capital is divided into shares;
• Shareholders are organizations

and/or individuals; the minimum
number of shareholders is three with
no maximum number;
• Shareholders are liable for debts and
other property liabilities of the
enterprise up to the value of the
capital to which they subscribe.
A joint stock company is entitled to issue
securities to mobilize capital--including
common and preferred shares and bonds.
Legal status A one-member LLC is a legal entity
separate from its owner; the owner is
liable for the debts of the company
up to the charter capital of the
company.
A two to 50 member limited liability
company has the status of a legal person.
A joint stock company is a limited liability
company and has the status of a legal person.
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Required
Charter
Content
The Charter of the company must
cover the following principle matters:
• Company name; address of
the head office, branches, and
representative offices;
• Business lines;

• Charter capital, method of
raising charter capital; a one
member LLC is not allowed
to reduce its charter capital;
• Name, address, nationality of
the owner;
• Rights and obligations of the
owner;
• Management structure;
• Legal representative of the
company;
• Formalities for company
decision making, principles
for settlement of internal
disputes;
• Bases and methods to decide
on remuneration, salaries and
bonuses of managers, etc;
• Principles to distribute after-
tax profit and losses;
• Circumstances/procedures to
dissolve and liquidate the
company;
• Formalities to amend and
The Charter of the company must
cover the following principle matters:
• Company name; address of the
company head office,
branches, and representative
offices;

• Business lines;
• Charter capital, method of
raising and reducing charter
capital;
• Name, address, nationality of
every member;
• Share capital structure and the
value of contributed capital by
each member;
• Rights and obligations of
members;
• Management structure;
• Legal representative of the
company;
• Formalities for company
decision making, principles for
settlement of internal disputes;
• Bases and methods to decide
on remuneration, salaries and
bonuses of managers, etc;
• Principles to distribute after-
tax profit and losses;
• Circumstances where a
member may request the
The Charter of the company must cover the
following principle matters:
• Name, address of company head
office, branches;
• Business lines;
• Charter capital, method of raising and

reducing charter capital;
• Name, address, nationality of every
founding shareholder;
• Number of shares held by founding
shareholders, types of shares, par
value of shares and total number of
shares of each type for sale/offer;
• Rights and obligations of
shareholders;
• Management structure;
• Legal representative of the company;
• Formalities for company’s decision
making, principles for settlement of
internal disputes;
• Bases and methods to decide on
remuneration, salaries and bonuses of
managers, etc;
• Principles to distribute after-tax profit
and losses;
• Circumstances where a shareholder
may request the company to buy back
his/her contributed capital;
• Circumstances/procedures to dissolve
and liquidate the company;
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supplement the company’s
charter;
• Full name and signature of the
legal representative of the

owner.
company to buy back his/her
contributed capital;
• Circumstance and procedures
to dissolve and liquidate the
company;
• Formalities to amend and
supplement the company’s
charter;
• Name and signature of every
member or every member’s
authorized representative.
Besides the above, members may
agree on other matters in the charter.
• Formalities to amend and supplement
the company’s charter;
• Name and signature of every
founding shareholder or every
founding shareholder’s authorized
representative.
Besides the above, shareholders may agree
on other matters in the charter.
Capital
Contribution
The sole owner of the company is
responsible for the charter capital of
the company. The owner is required
to transfer ownership of the assets
contributed to the company.
In some business activities such as

banking, insurance, etc., there are
minimum capital requirements.
Except for the cases mentioned
above, the owner can fix the charter
There is no minimum requirement for
equity contribution by any member
regardless of nationality. However, in
some business activities (which will be
specified by the Government), the
maximum ratio of capital contributed
by foreign member(s) will be
specified.
iii

In some business activities such as
banking, insurance, etc., there are
minimum capital requirements.
Except for the cases mentioned above,
the investors can fix their capital
There is no minimum requirement for equity
contribution by any shareholder regardless of
nationality. However, in some business
activities (which will be specified by the
Government), the maximum ratio of capital
contributed by foreign shareholders will be
specified.
iv
In some business activities such as banking,
insurance, etc., there are minimum capital
requirements.

Except for the cases mentioned above, the
investors can fix their capital contribution.
iii
At the time of writing this booklet, the Government has not issued regulations to specify ratios.
iv
At the time of writing this booklet, the Government has not issued regulations to specify ratios.
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capital of the company. The owner
has to pay its capital in accordance
with the payment schedule.
contribution. Investors have to pay
their capital in accordance with the
payment schedule.
Investors have to pay their capital in
accordance with the payment schedule.
Internal
Management
The internal management of a one-
member limited liability company
depends on whether the owner is an
individual or an organization.
1. If the owner is an individual,
the management structure
consists of the president and
Director or General Director.
The company owner is the
company’s President. The
President may hold the post of
Director or another person

may be hired to take that
position. The President is the
owner of the company,
whereas the Director is the
person who manages the day-
to-day business of the
company. In other words, the
Director plays the role of the
chief executive officer of a
company. Either the President
or Director is the legal
representative of the company
as provided in the charter.
2. If the owner of the company
A two to 50 member limited liability
company has a Members’ Council,
Chairman of the Members’ Council
and Director or General Director. A
company with eleven or more
members must also have a Controller
Board. A Controller Board may be set
up in a company with fewer than
eleven members. Rights, obligations,
criteria, conditions and working rules
of the Controller Board and its head
must be provided for in the charter.
Either the Chairman of the Members’
Council or Director or General
Director will be the legal
representative of the company as

stipulated in the charter.
Legislation provides detailed rules on
Members’ Meetings, how to form a
quorum, etc.
The management structure of a joint stock
company consists of the Shareholders’
Meeting, the Management Board, the
Director or General Director; for a company
with more than eleven shareholders being an
organization holding more than 50% of total
shares, it must also have a Controller Board.
The Chairman of the Management Board or
the Director or General Director is the legal
representative of the company as stipulated in
the charter.
The Director or General Director of the
company cannot concurrently be the director
or general director of another enterprise.
Legislation provides detailed rules on
Shareholders’ Meeting, how to form a
Management Board, its powers, etc.
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is an organization such as
another company, the
management structure can
follow one of the following
forms:
• If the owner appoints one
authorized representative,

that person will be the
company’s president. In
such case, the company
management structure will
comprise the president,
the director (or general
director) and the
controller.
• If the owner appoints
more than one authorized
representative, all
authorized representatives
constitute the Members’
Council (in other words,
Board of Management or
Board of Directors).
In such a case, the
company management
structure will comprise
the Members’ Council,
director (or general
director) and controller.
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The charter must specify that either
the President, the Chairman of the
Members’ Council or the Director
will be the legal representative of the
company.
Transfer of

capital
The owner of the company is entitled
to sell part or all of its capital in the
company; if the transfer of capital
leads to an increase in the number of
investors, the company must convert
to a two to 50 member limited
liability company.
A member of the company is entitled
to transfer part or all of its capital to a
third party in accordance with the
following provisions:
• A capital share must be offered
under the same conditions to
all other members of the
company and in proportion to
their share of capital;
• A capital share may be
transferred to a non-member if
all remaining members fail to
buy such capital share within
30 days from the date of offer.
Shares are freely transferable, except that
voting preference shares and ordinary shares
of founding shareholders may not be
transferred within three years from the date
the business registration is granted, with
some exceptions.
The transfer may be made in writing as usual
or by mere delivery of the share certificate.

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APPENDIX 2
COMPARISON OF A PRIVATE ENTERPRISE AND A PARTNERSHIP UNDER THE LAW ON ENTERPRISES
PRIVATE ENTERPRISE PARTNERSHIP
Definition
A private enterprise may be established and owned
by an individual, but that individual can establish
only one private enterprise.
A partnership is an enterprise in which:
• There are at least two partners who: are co-owners of the
company, jointly conduct business under one common name
(general partners); in addition to general partners, there are also
limited partners.
• General partners must be individuals who are liable for all
obligations of the partnership whereas limited partners are liable
for debts of the partnership only to the extent of their capital
contribution to the partnership. Limited partners can be
individuals or organizations (ie. companies).
Legal status
A private enterprise is not a legal entity separate
from its owner; the owner is liable for all of its
operations with his or her entire property. In other
words, the owner of a private enterprise has
unlimited liability for the private enterprise’s
obligations.
A partnership has legal person status as from the date of receipt of the
business registration certificate.
Required
charter

content
A private enterprise is not required to have a charter. The Charter of a partnership must cover the following principle matters:
• Partnership name, address of the partnership head office,
branches and/or representative offices (if any);
• Business lines;
• Charter capital, method of raising and reducing charter capital;
• Full name, address, nationality of every general partner;
• The value of each partner’s contributed capital;
• Rights and obligations of partners;
• Internal management structure;
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• Legal representative of the partnership;
• Formalities on how the partnership will make decisions,
principles for settlement of internal disputes;
• Bases and methods to decide on remuneration, salaries and
bonuses of managers, etc;
• Principles on distribution of after-tax profit and losses;
• Circumstances of dissolution and procedures for dissolution and
liquidation of assets of the partnership;
• Formalities to amend and supplement the partnership’s charter;
• Full name and signature of every general partner.
Besides the foregoing, partners may agree upon other subjects in their
charter.
Capital
contribution
The owner of a private enterprise is solely
responsible for the whole investment capital of a
private enterprise. The owner is not required to
transfer ownership of his/its personal assets to the

enterprise.
• General and limited partners must establish a capital contribution
schedule, and make payment as committed.
• If a general partner fails to contribute capital in full and on time,
thereby causing losses to the partnership, such partner must
compensate the partnership for its losses.
• If a limited partner fails to contribute capital in full and on time,
the shortfall is regarded as a debt owned to the partnership; in
that case, the limited partner may be expelled from partnerships
by the Partners’ Council.
• At the time of making his/its full capital contribution, a partner
shall be granted a capital share certificate.
Internal
The owner of a private enterprise has full decision- Partners shall form a Partners’ Council. The Partners’ Council shall
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Management
making power on any business issue, even though
s/he may hire a director to manage the day-to-day
business of the enterprise.
select one general partner as its chairman, and that person shall
concurrently be the director or general director, unless otherwise
provided in the partnership’s charter.
The Partners’ Council is entitled to decide all business operations of the
Partnership. For important matters (listed in the Enterprises Law and
also provided for in the charter), decisions shall be made by at least
three-quarters of the total number of general partners. For other matters,
decisions are made by at least two-thirds of all general partners; a
special ratio must be provided for in the charter.
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APPENDIX 3
CRITERIA FOR APPLICATION OF DIFFERENT CORPORATE TAX RATES FOR NEW BUSINESS ESTABLISHMENTS
Tax Tax
rate
Application
Period
Criteria Exemption Period
(from year
taxable income
generated)
50%
Reduction
Period
Corporate
income tax
28% Entire investment period Tax on every project
unless the project
qualifies for a lower rate.
None None
20% 10 years from commencement of the project (then the rate reverts to 28%) Investment in a List A
[*]
business.
2 years 3 subsequent
years
Investment in a List C
[**]
location, regardless of the
type of business.
2 years 6 subsequent

years
15% 12 years from commencement of the project (then the rate reverts to 28%) Investment in a List A
business that is situated in
a List C location. 3 years 7 subsequent
years
[
*]
A List A--List of sectors entitled to investment preferences, Appendix 4.
[
**]
List B--List of sectors entitled to special investment preferences, Appendix 4.
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10% 15 years from commencement of the project (then the rate reverts to 28%)
Investment in a List B business, having a larger socio-economic impact, may
entitle investor to a larger incentive. In such a case, the Ministry of Finance
may suggest that the Prime Minister apply the preferential tax rate of 10%
Investment in a List B
[***]
business.
4 years 9 subsequent
years
Investment in a List
D
[****]
location.
In addition, investors are exempt from Corporate Income Tax on income earned from:
1. Performance of contracts for scientific research and technological development and contracts to provide scientific and technological
information services;
2. Sale of products during a period of trial production done in strict accordance with trial production procedures, and for no more than six

months from commencement of the trial production;
3. Sale of products turned out by applying technologies for the first time in Vietnam, applicable for no more than one year after the
application of such technologies to production;
4. Performance of technical service contracts which directly serve agricultural development;
5. Job training exclusively for ethnic minority people;
6. Production and trading of goods or carry out services activities which are set up exclusively for disabled people;
7. Job training exclusively for disabled people, children in exceptionally difficult circumstances, and victims of social evils.
Of note, investors who contribute capital in the forms of patents, technical know-how, technical processes or technical services are exempt from
Corporate Income Tax payment on income earned from such contribution.
[***]
A List C location includes areas considered to have social-economic difficulties, Appendix 4.
[
****]
A List D location includes areas considered to have special social-economic difficulties, Appendix 4.
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APPENDIX 4
List A
BUSINESS DOMAINS ELIGIBLE FOR INVESTMENT PREFERENCES
v
Investment projects in the following branches, lines and/or domains are eligible for
preferences:
I. Manufacture of new materials and production of new energy; manufacture of high-
technological, bio-technological, information technological products and
mechanical manufacturing:
1. Production of: soundproof, electricity-insulated or high heat-insulated materials;
synthetic materials used as a substitute for wood; fire-proof materials;
construction plastic; glass fiber; specially-used cement.
2. Production of non-ferrous metals and refining of cast iron.
3. Production of moulds and prototypes for metal and non-metal products.

4. Investment in the construction of new power plants, and in power distribution and
transmission.
5. Production of medical supplies and equipment, construction of warehouses for
pharmaceutical products, reservation of medicines for human use in case of
natural disasters and epidemics.
6. Production of equipment used to test toxic substances in foodstuffs.
7. Development of the petrochemical industry.
8. Production of coke and active coal.
9. Production of: plant protection drugs, pesticides, disease preventive and curative
drugs for animals and aquatic creatures; veterinary drugs.
10. Materials for production of medicines including medicines for prevention or
treatment of social diseases; vaccines; biological products; medicines produced
from pharmaceutical materials; eastern medicines.
11. Investment in: construction of facilities for biological experiment, assessment of
the applicability of medicines; pharmaceutical establishments to satisfy GMP
production standards; preserving, testing, and carrying out-clinical tests of
medicines, landing, cultivating or harvesting and processing of pharmaceutical
materials.
12. Development of: sources of pharmaceutical materials and production of
medicines from pharmaceutical materials; projects for research or to
substantiate scientific grounds for prescriptions of eastern medicines and
formulation of standards for testing of prescriptions of eastern medicines;
13. survey and statistics of types of pharmaceutical materials used to produce
medicines; collection, inheritance and application of prescriptions for eastern
medicines, finding, exploitation and use of new pharmaceutical materials.
14. Production of electronic appliances.
v
This list was issued together with the Government’s Decree No. 108/2006/NĐ-CP of September 22, 2006
detailing implementation of the Investment Law.
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